“Going above and beyond” is usually considered to be a good thing. But not when it comes to your eCommerce delivery expenses.
That’s why this week’s post is dedicated to some of the most common ways that eTailers can rack up bigger packaging and parcel delivery costs without even trying.
How many of these parcel shipping faux pas apply to you or your business?
1. Ignoring the impact of packaging and fill materials on shipping costs
A few years ago, parcel carriers recognized that they were losing money on larger, lighter-weight packages that ate up truck space, so they instituted dimensional weight pricing, or dim weight pricing, to address this issue. As a result, if you’re still shipping via boxes that are larger than necessary, you’re essentially paying parcel carriers extra to ship a whole lot of nothing.
In light of that, we just have to ask: When was the last time you put some serious time and energy into examining and right-sizing your shipping boxes?
A little extra attention here could potentially save you hundreds of thousands of dollars in the long run.
2. Sending all orders out in a box – even if your product isn’t fragile
Have you noticed how many more of your personal orders are beginning to arrive in alternative forms of packaging, such as polybags? More important, have you thought about why?
These flexible and durable conveyances allow shippers to reduce the weight of each package, while still accommodating and protecting products. Use of polybags can open the door to significantly reduced eCommerce delivery costs for programs like the USPS’s Lightweight Parcel Select.
If you haven’t analyzed how this packaging change could impact costs, maybe it’s time you did. While they’re not a viable option for every online merchant, they could be just what the doctor ordered for marketers of smaller, more durable, lighter-weight products.
3. Assuming your parcel carrier agreements are “all good”
Carriers are pros at finding ways to charge you more than their base rates in the form of accessorial fees like residential delivery and peak season surcharges. Just as important, they’re adept at hiding these additional expenses within the fine print of their pricing sheets.
While it takes time, be sure to carefully and painstakingly peruse all of the terms and conditions of your carrier agreements. It will help you weigh the pros and cons of each delivery option more effectively – and avoid billing surprises.
4. Sticking with a single fulfillment center strategy
As a general rule, the farther your packages must travel within each parcel carrier’s network, and the more zones they need to cross, the greater your parcel delivery expenses will be. That’s why a one-DC strategy doesn’t always bode well for your delivery budget – and why expanding your fulfillment network can be a huge money-saver.
Adding fulfillment centers to your distribution network can create enormous shipping economies – even after you’ve factored in the extra costs of carrying inventory in more than one place. The eCommerce delivery savings could run anywhere from 10% for a shift from one to two facilities and as much as 30% if you’re expanding from one shipping location to three.
(A quick side note here: Should such an expansion not be possible for your company yet, it may still be possible for you to eliminate many expensive, high-zone moves simply by moving your DC to a more central U.S. location such as Dallas or Chicago.)
5. Shipping under your own parcel agreements
Contrary to what many believe, there’s actually a lot of wiggle room and opportunity for price negotiation with parcel carriers. But alas, that door tends to open only for large-volume shippers.
“Gee guys,” you’re probably thinking. “Thanks for sharing something I can’t do anything about.”
But hear us out, because even if you’re a relatively small-volume shipper, you can gain buying leverage by outsourcing parcel management to a third-party fulfillment company.
Companies like Amware Fulfillment handle large volumes of shipments for many different companies. As a result, we have a higher aggregate shipping spend that we can use to negotiate better parcel shipping rates. And we can pass along these discounted rates directly to clients. (Think 10-40% range for heavier packages and lower but still significant discounts for lighter packages.)
Reining in eCommerce delivery costs
To learn more about how you can avoid going above-and-beyond your eCommerce delivery budget, contact Amware today. We specialize in offering parcel management services that help our eCommerce and direct selling customers reduce parcel shipping costs.